Bangkok--25 Nov--Standard & Poor's
Standard & Poor's Ratings Services revised the outlook to stable from negative and at the same time affirmed its 'BBB-' long-term rating on Montrose Memorial Hospital Board of Trustees, Colo.'s series 2003 enterprise revenue bonds and its 'BBB-' underlying rating (SPUR) on the board's series 1997A and series 1997B bonds. The board issued the bonds for Montrose Memorial Hospital (MMH).
The outlook change reflects MMH's improving operating and balance sheet metrics for the fiscal year ended Dec. 31, 2008, and for the nine months year-to-date ended Sept. 30, 2009," said Standard & Poor's credit analyst Karl Propst. "A higher rating is precluded at this time due to still moderately high leverage and debt burden, and liquidity that remains constrained." MMH's credit strengths include good outpatient volume growth and adequate maximum annual debt service coverage.
Operating income was a positive $144,000 on $50.1 million of total revenues during the nine months year-to-date ended Sept. 30, continuing the positive operating results produced in fiscal 2008 when MMH generated $283,000 in operating income on $67.6 million of total revenues. Year-to-date operating income was up $165,000 from the same period last year, even though this year's results were behind budget by $935,000. Management attributes the three-year operational turnaround to a number of productivity and other improvement initiatives including the recruitment of several new physicians, a QHR-led charge-master review and strategic pricing study, and a throughput analysis for better patient volume management. MMH has also reduced its compensation expense by about $200,000 per month through flexible staffing and other productivity improvement efforts. Additionally, solid increases in outpatient visits along with robust growth in MMH's joint replacement center helped to offset the 9.4% decline in inpatient admissions and the hospital's slightly lower medical surgical length of stay.
With the addition of several new physicians, MMH is well positioned to drive incremental volume growth. MMH is budgeting about $160,000 in operating income for 2010 after deduction of interest expense and excess income of about $3 million, including $300,000 in budgeted support from Montrose County.
Cash flow remains adequate to support the payment of debt service. On Dec. 31, 2008, EBIDA was $7.7 million, generating maximum annual debt service coverage (MADS) coverage of 2.25x. For the nine months year-to-date ended Sept. 30, 2009, EBIDA was $5.9 million, resulting in approximately 2.3x MADS. Management expects MADS for 2010 to be about 2.25x based on the level of budgeted excess revenues.
MMH consists of a 53-staffed bed, acute-care hospital and clinics located throughout western Colorado. Inpatient utilization totaled 2,191 at Sept. 30 2009. Outpatient utilization totaled 73,513 through September 2009.
RELATED RESEARCH
USPF Criteria: "Not-For-Profit Health Care," June 14, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Karl Propst, Dallas (1) 214-871-1427
Geraldine Poon, San Francisco (1) 415-371-5078